Issue 34 – The week of Oct 3rd, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• CAD S&P Global PMI (Purchasing Managers Index) Markit Manufacturing PMI, is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies. An index reading above 50.0 indicates an overall increase in that variable, below 50.0 an overall decrease. All data are seasonally adjusted.

Tuesday

• US Redbook index. A private analysis of retail sales is used to help verify government retail sales reports. Strong sales are a sign the economy is healthy but could put upward pressure on inflation is bullish for precious metals.
• USA Weekly Crude Oil Stocks. API’s Weekly Statistical Bulletin (WSB) has reported total U.S. and regional data relating to refinery operations and the production of the four major petroleum products: motor gasoline, kerosene jet fuel, distillate (by sulphur content), and residual fuel oil. These products represent more than 85% of the total petroleum industry. Stocks down are good for precious metals.

Wednesday

• USA ADP Employment Change. The Employment Change released by the Automatic Data Processing, Inc, Inc is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. So a high reading is traditionally seen as positive, or bullish for the USD, while a low reading is seen as negative, or bearish.

Thursday

• CAD Bank of Canada Governor speech. His comments on the policy outlook, economy and inflation could impact the Canadian dollar’s performance against its major rivals.

Friday

• CAD Net Change in Employment. The employment Change released by Statistics Canada is a measure of the change in the number of employed people in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive, or bullish for the CAD, while a low reading is seen as negative or bearish.
• CAD Unemployment Rate. The Unemployment Rate released by Statistics Canada is the number of unemployed workers divided by the total civilian labour force. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labour market. As a result, a rise leads to a weakening of the Canadian economy. Normally, a decrease in the figure is seen as positive (or bullish) for the CAD, while an increase is seen as negative or bearish
• USA Nonfarm Payrolls. The nonfarm payrolls released by the US Bureau of Labor Statistics presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to their high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months’ reviews ​and the unemployment rate are as relevant as the headline figure, and therefore market’s reaction depends on how the market assets them all.
• USA CFTC Net Gold Positions. The weekly Commitments of Traders (COT) report provides information on the size and the direction of the positions taken, across all maturities, with participants primarily based in Chicago and New York futures markets. Forex trades focus on “non-commercial” or speculative positions, to determine whether a trend remains healthy or not, and also market sentiment towards a certain asset.

Geopolitics

Lots happening in the world this week and this month. The war of words between Russia and the US is heating up. Russian political pundits are stirring up the home fires with comments along the lines of; “We should have nuked all of England when so many of our enemies we at the Queen’s funeral”. Imagine FOX news but worse. They are suffering huge losses on the battlefield and Putin is increasingly being backed into a corner. What lines he is prepared to cross only he knows.

Xi Jing Pin is set to cement his role as absolute ruler of China when the Chinese Communist Party meets later this month at its sixth plenary session. There has been an understanding that leaders would only sit as the leader for two 5 year terms. This was created to prevent another Mao Tse Dong ruler for life. Xi is fully expected to seek and get a third term. He has purged many party opponents over the past few years. Doesn’t look like he wants to leave office.

The saying “those who forget the past are condemned to repeat it” is ringing loud this week. Maybe we all need a history lesson.

The Call

Precious metals continue to remain on tenuous ground. They have been on a downward trend since the Russian invasion of Ukraine 222 days ago, along with most other currencies versus the US dollar. With employment reports for Canada and the US set to come out on Friday this week and increased sabre rattling between the US and Russia using the nuclear word metals are looking hard-pressed to have reached their downside capitulation moment yet. Looks like market pops are areas to sell. The pendulum will turn one day but not this week probably.

Last Week in Review

• Precious metals had weekly gains last week yet remain under a lot of downward pressure
• The Nord Stream pipeline seems to have suffered some kind of sabotage by unknown perpetrators the day before the rival Baltic pipeline is inaugurated
• Bank of England announced 65 billion pound gilt purchase after mini-budget is introduced and British pound falls as low as 1.03 against the US dollar
• Turkish central bank gold reserves went up for the first time since 2020

	Gold	Silver
Open	1643	18.77
High	1675	19.28
Low	1614	17.95
Close	1664	19.09